There has never been a more exciting yet challenging time for the digital asset industry. The broad market de-valuation of risky assets is surprisingly not the result of a crackdown from regulators, but a combination of central bankers’ moves to purposely slow the economy, nagging post-COVID supply chain issues and the Ukrainian-Russo War. While specific crypto regulation hangs like a sword of Damocles over the industry, the reality is that most bona fide projects are playing within the rules of the system or at least trying to behave. There are systematic challenges fitting the square peg of crypto into the round hole of traditional asset handling, but from where we sit, if you try to do the right thing, the regulators will work with you. There are still, unfortunately, scores and scores of rugpulls, false projects, scammers and paid-marketers (and market makers) creating hype-driven, meme projects, and LARPing founders doing what they can to extract value from naïve investors. If you are new to crypto, take 1 YEAR and study the space (e.g. the tech, the terminology, the players, the news). Keep in mind that centralized exchanges that derive revenue from trading are still compelling projects to hire market makers to create artificial volume, as they themselves, lever up to create fake volume. Be warned, trust but verify, and remember that every TG message, CT action, 4chan, Reddit or Discord post is someone trying to make money and that “doing your own research” has never been more critical. With that in mind, as long as you do not get over your head, have fun and enjoy a front row seat for innovation, creation and the future of everything.
There are more positive things about the industry to get excited about than there are challenges at this point. Infrastructure and commerce are moving blockchain technology from bench-test to real world applications. The entities that embrace it are going to win, and the one’s that ignore it will go the way of the dinosaurs. Enjoy the ride.
~ Howard Krieger, co-Founder and CEO
2022 Roadmap Update
Below are the by quarter tasks we wanted to see complete in 2022, and as we round out the 3rd quarter, let’s see where we stand! Here is a link to the original Roadmap 2022 article put out in January.
Overview: RL+ will be a permissioned version of ReserveLending (RL) for use by KYC’d institutions only, custodied by a Host broker-dealer, leveraging information about product, rates and usability obtained from other institutional DeFi programs, and our discussions with major KYC partners. This is the next RB2B waypoint.
Create permissioned core unContracts (the “Core”) — COMPLETE
Create a username/password 2FA interface — COMPLETE
Build out ReserveLending+ UI experience — COMPLETE
Partner with a broker-dealer to custody the Core — COMPLETE (we partnered with Aegis Trust Company)
Market to KYC’d entities through strategic partnerships with KYC partner platforms. -ONGOING (to date we have 3 or 4 entities signed up with our banking partner (NextBank), and I expect it will take 12 months or so to get them over to self-custodied DeFI given the pace of adoption, market demand, benefit to their business and market conditions)
Overview: ReserveLending (RL), a decentralized P2P (“DeFi”) protocol that allows crypto holders of certain tokens to Deposit, Earn and Borrow.
Calibration of stablecoin interest rate models to align with defirate.com metrics-COMPLETE (Thank you Duke Togo for your help achieving this groundbreaking result.)
Collateral factor review and, for vote, possible adjustments-COMPLETE
Maintenance, debugging and further documentation-COMPLETE
Continued evangelism of market leading APYs-ONGOING
Overview: ReserveFunding (RF) is a DeFi to TradFi platform that allows cryptowealthy, U.S. citizens to participate in 506(c) alternative investment opportunities without having to sell their crypto. Our first fund, Atipana, was filled in December, and our new splash page encourages guests to select the types of funds in which they are interested, and allows funds to sign up to be considered for listing!
Gathering marketing data on selected fund types — COMPLETE (result was inconclusive regarding which funds to target. ESG investment did not come up as a priority amongst Crypto HNWs, and more interest was placed on shorter lock-up periods and higher returns than the nature of the investment itself.)
Creating fund acquisition pipeline from RF entrants-COMPLETE (we have onboarded ReserveFunding Series II and Trivium2, a direct feeder fund to the Alumni Venture Group. 3 other commercial funds and possibly up to 5 crowd-funding opportunities are in the wings. We will see how the two posted offers do before overloading the platform with more stuff.)
Maintenance, debugging and further documentation-COMPLETE
Expand Atipana Opportunity Fund to first TradFi vault-OPEN (timing is likely late fall, but this is in the mix)
Design Percent® Aggregator interface per MOU (Memo Of Understanding) allowing users to invest in all Percent® deals-COMPLETE (but not in a good way, lol. Percent indicated as the market was collapsing that they did not have a digital asset strategy nor did they intend to incorporate this into their development roadmap anytime soon. This is understandable given the success they’ve had in other areas and the persistent uncertainty from some market participants regarding the ability to make an offer available but not solicit investment, underwriting the source of funds and general stigma that comes with accepting this asset class. It won’t stop all from trying, thank goodness, but it stopped these guys!)
Overview: Similar to RL+, RB2B is for permissioned entities. Unlike RL+, RB2B will be a collateral-less ‘cash v credit’ spot market for institutions that will require not only underwriting for compliance but also to determine credit limits. Please note this time frame is dependent upon the adoption of RL+, market conditions and many other factors.
Design a collateral-free #DeFi version of RL+ -COMPLETE (the design is down on paper but not built)
Develop credit underwriting process (or partnership) -OPEN (but not a heavy ask)
Negotiate supply-side line of credit with Galaxy Digital -OPEN (but they are just waiting for the first two pieces to be complete. Great relationship with those guys.
We are negotiating deals with three counterparties to license ReserveLending’s core to supplement their trading and staking platform. So, why would an exchange wish to license ReserveLending’s core? Money.
Spot exchanges, staking apps and trading tools are all good for immediate transaction volume, but the folks that use those tools need a place to park their assets. Traders also like the option of leveraging, as opposed to selling, their positions to maximize their capital base. Our permission-less app works extremely well with other permission-less spot trading platforms.
The first counterparty is Bancor. Their DAO will determine whether we move forward, but if agreeable, a version of ReserveLending in Bancor’s livery will be made available and cross-promoted by the exchange. The combination of our margin lending protocols and the ability to swap or invest allows for the following type of activity:
From our proposal: “Our retail product will allow Bancor users the following capabilities: 1) Deposit and earn interest on tier 1 tokens … 2) Borrow at reasonable rates of interest … 3) Not get caught in liquidity traps like centralized lenders Celsius, Nexo and BlockFi … 4) Allow users to margin borrow to leverage up using a combination of Bancor/BancorDEFI (our tentative suggested name for the product) … 5) Short trade by supplying one asset, borrow the asset to be shorted, and swapping that asset for a stablecoin using Bancor … 5) pay-off loans using existing currency by using Bancor to convert the currency borrower before paying off the loans.”
The other two entities are an extant staking site with close to 10,000 users and trading tools application that has also served thousands of traders with unique, permission-less capabilities similar to a traditional, self-directed brokerage.
The lift from our side is simple because it involves new front-ends wrapped around the existing core. So multiple platforms all leveraging the same liquidity pools through different front doors.
The last piece, of course, is ReserveDAO, and I encourage folks to get caught up on the happenings there. This roadmap update is centered around unFederalReserve’s progress.
3rd Open Market Purchase
On Wednesday, September 23rd, we successfully completed our 3rd open market purchase. This purchase was made by advancing funds from corporate’s Treasury and will be reimbursed by reserves from ReserveLending. This purchase was made in accordance with our LaaS model. The amount of $eRSDL purchased was about 1 million tokens. These tokens will be held in the Treasury for processing, and we will inform the community when they have been sent to the burn wallet.
This brings the total eRSDL purchased out of the market under the open market purchase program to approximately 6.6 million or 1.46% in supply removed from the market through either burning on storage in corporate Treasury since the program’s inception in last 2021.
We will continue to perform quarterly exercises similarly using licensing fees earned for the software and our know-how.
About Residual Token, Inc. dba unFederalReserve
In business since 2018, Residual’s team of former bankers, technologists, and compliance professionals have been exploring ways to make crypto lending and borrowing markets safer and traditional markets more efficient. They currently have in development a handful of blockchain-based software available for license. Its flagship product, ReserveLending, allows permissionless access to crypto holders to deposit, earn and borrow top digital assets safely, efficiently, and effectively for cash management, hedging, or speculative purposes.
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